Two-dimensional extended warranty length design from incomplete warranty data based on a new price curve considering different maintenance policies

The extended warranty issue is concerned with additional after-sale protection for a consumer, at the costof an extra premium. Depending upon the reliability and durability of the components or the system, theextension of warranty may be done with regard to either age or usage or both, for those specified componentsor the entire system. The age-based analysis is usually referred to as the one-dimensional problem, while agealong with usage-based analysis is termed as the two-dimensional problem. By considering two factors, viz. premium ceiling and premium escalation rate, respectively indicating the maximum allowable premium andthe rate at which the allowable premium is raised with the increased coverage, the present paper deals withthe design of a new price curve based optimum extended warranty policies corresponding to perfect, minimal,and imperfect repairs, for both one- and two-dimensional problems. The availability and use of incompletefield data on age and usage, facilitate establishing the relative advantage of the two-dimensional modelingover its one-dimensional counterpart, while considering an extension of the baseline warranty coverage. Thefindings have been elaborated with the help of a synthetic real-life data.